WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A011400140001-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 19
• Document Creation Date: December 21, 2016
• Document Release Date: January 31, 2008
• Sequence Number: 1
• Publication Date: September 24, 1976
• Content Type: SUMMARY

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Iq
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Secret
Weekly Summary
DOS REVIEW COMPLETED
DIA REVIEW COMPLETED
Secret
CI WS 76-039
No. 0039/76
September 24, 1976
Copy N2 1419
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CONTENTS
WEEKLY SUMMARY, issued every Friday morning by the
ice of Current intelligence, re:acsrts arms analyzes signfi-
pments of the week ifi ough noon o Thursday. It
includes material coordinated with or prepared
111d the Directorate of Science aria' Technology.
1
Middle East
Lebanon
2
Far East
North Korea - UN; China
ion
t U
i
S
3
ov
n
e
USSR-Japan;
4
Europe
Malta; Italy; Sweden; Finland
6
Western Hemisphere
Panama
7
Egypt: Sadal's Rivalry with Syria
9
Lebanon: Presidential Turnover
11
Oil Sales Rising in Volumeand Price
15
Yugoslavia: The Emigre Problem
Comments and queries on the contents of this
publication are welcome. They may be
directed to the editor of the Weekly
Summary
25X6
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LEBANON
l
Sulayman Franjiyah's term as presi-
dent finally came to an end this week, and
his successor, Ilyas Sarkis, assumed of-
fice-under less than auspicious cir-
cumstances. The lo-awaited Sarkis in-
auguration took place only four days after
the virtual collapse of the latest Arab
League peace initiative and in the midst of
a new upsurge of fighting in Beirut.
The breakdown on September 19 of
tripartite talks that Arab League
mediator al-Khuli promoted to work out
a cease-fire and reconciliation between
Syria and the Palestinians dimmed the
already bleak prospects for a
breakthrough in negotiations to end the
18-month-old civil war. It also increased
the likelihood that Syria will soon resume
military operations in Lebanon.
The most immediate effect of the
deadlock was to trigger renewed fighting
in Beirut, forcing a change in the venue of
Sarkis' inauguration from the capital to
Shaturah, a Lebanese town under Syrian
occupation. Leftist leader Kamal
Jumblatt and Muslim Prime Minister
Karami boycotted the inauguration, but
65 deputies-a quorum-were on hand.
Before leaving office, Franjiyah
stripped Karami, a long-time political foe,
of most of his cabinet responsibilities, in-
cluding the defense and finance portfolios.
Franjiyah named his ally, Christian ex-
tremist Camille Shamun, who already
holds the positions of interior minister and
foreign minister, to the defense post and
to the job of acting prime minister in
Karami's absence. Shamun doubtless
hopes to use his position as defense
minister to gain a dominant role in the
formation of a new Lebanese army.
Egyptian President Sadat and Syrian
President Asad reportedly agreed this
week to attend an oft-postponed four-
power Arab summit conference in Saudi
Arabia. The meeting may take place
sometime next week, after the Muslim
holiday celebrating the breaking of the
month-long Ramadan period of fasting.
Sarkis and several other prominent
Lebanese leaders apparently were in-
strumental in arranging the meeting in the
hope that Asad and Sadat can be per-
suaded to put aside their differences and
work together to resolve the Lebanese
crisis. (An assessment of Sadat's rivalry
with Asad appears on page 7.)
There is no indication, however, that
the two Arab leaders are ready to
cooperate. Sadat doubtless welcomes the
opportunity to gain a role in determining
the shape of any political settlement in
Lebanon. Judging by the continued harsh
Syrian propaganda attacks on Sadat,
however, Asad has agreed to attend the
summit more out of deference to the
Saudis than from any compelling interest
in making up with Sadat. (The prospects
for President Sarkis' administration are
reviewed on page 9.)
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Soviets Shifting Positions
The USSR is cutting back its criticism
of Syria in reaction, apparently, to recent
Arab political activity concerning
Lebanon. The Soviets seem to want to en-
courage all sides toward a political settle-
ment, but we have no evidence that they
foresee an early solution to the crisis.
The USSR is being more evenhanded
toward the Syrians and the Palestinians in
its public statements. On September 8, an
authoritative "Observer" article in Prav-
da for the first time upbraided "leftist
elements" of the Palestine Liberation
Organization along with the Syrian
government for failing to achieve a cease--
fire. Soviet public statements on Syria
have softened in subsequent weeks, and
the central press has stopped calling for
Syrian troop withdrawals.
On September 20, a Soviet diplomat in
Cairo told US officials that Moscow is
urging both the Syrians and the
Palestinians to reach a compromise. The
Soviets, he said, have been using "friendly
persuasion" to try to get Syrian President
Asad to adopt a more impartial position
toward the Christians and Muslims in
Lebanon, and at the same time have been
pressing the Palestinians to be more ac-
commodating with the Syrian leadership.
The Soviet official added that the re-
cent visit to Damascus by Vladimir
Vinogradov, the cochairman of the
Geneva conference on the Middle East,
was meant to put pressure on Syria
An article in Pravda by Yuri Glukhov
on September 19 called for a solution to
the Arab-Israeli crisis as a prerequisite to
ending the Lebanese civil war. Glukhov
also emphasized the "urgency" of conven-
ing the Geneva conference.
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Chinese leaders stand in order of rank at the memorial service in Peking on September 18
eulogy seemed designed to placate civilian
and military leaders across the political
spectrum and reinforced the notion that a
collective leadership, composed of
members of the major contending
political factions, is now at work.
Hua included enough references to
political struggle to appease the party's
left wing but omitted explicit mention of
some of the leftists' pet programs, a move
that undoubtedly pleased the right. As he
did in his first public speech on September 25X1
I, Hua went out of his way to praise the
military.
Virtually the entire party Central Com-
mittee was in Peking during the mourning
period, but most Central Committee
members from the provinces returned
home before Mao's funeral, thus failing to
make use of an opportunity to hold a Cen-
tral Committee meeting to discuss the
succession issue. Party leaders may have
postponed the potentially disruptive
meeting in order to preserve the facade of
unity displayed since Mao's death.
The contending political factions may
be playing for time in hopes of strengthen-
ing their positions, and one of them may
push for a meeting when it feels sufficient-
ly strong. More conservative leaders
would like to continue to tone down the
campaign against Teng 1-lsiao-ping and
emphasize production themes. Leftists
will probably try to rejuvenate the cam-25X1
paign in an effort to discredit a number of
rightists on the Central Committee.
NORTH KOREA - UN I~ IG~
North Korea, in a sudden turnvout,
has withdrawn its draft resolution from
the UN General Assembly's agenda.
South Korea has followed suit. The North
Korean decision appears to be a tactical
one and does not mean that the com-
munists are abandoning their long-stand-
ing effort to build international pressure
against the US presence in South Korea.
The North Koreans probably detected
some weakening in the support for their
position at the UN this fall. Last year two
conflicting Korean resolutions were
passed, and the North was hoping this
year to achieve an outright. defeat of
the South's resolution.
A number of recent developments had
improved the prospects for passage again
of South Korea's resolution. These in-
clude:
? The unusual display of dissent
registered by 23 countries against
North Korea's position at the non-
aligned conference in Sri Lanka.
? An improved pro-South lobbying
effort.
? The lack of enthusiasm among
North Korea's traditional supporters
for the harsh language of this year's
draft UN resolution.
? Adverse publicity stemming from
the Panmunjom incident in
mid-August.
Although the move to defer debate runs
sharply counter to North Korea's original
objective, the North is already pointing
to the decision as evidence that it is
the responsible party seeking a reason-
able approach to the Korea issue. North
Korea took a similar line in the after-
math of the Panmunjom incident last
month.
CHINA
15-/f
With the nine-day mourning period for
Mao Tse-tung now over, the Chinese
leadership has apparently decided to try
to return to business as usual and to post-
pone temporarily efforts to arrange a
successor leadership.
The top party personalities, arranged in
strict protocol order, stood together
before the Chinese people at the memorial
service on September 18 for the first time
in more than five years. Mao's unpopular
wife, Chiang Ching, took her place in the
lineup and was accorded no special public
treatment by other leaders as the Chair-
man's widow.
Premier and party first vice chairman
Hua Kuo-feng, who is now the de facto
party leader, delivered a carefully bal-
anced eulogy that avoided the excessive
praise lavished on Mao at the height of
the cult of personality in the 1960s. The
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awns. e
USSR-JAPAN z 3 -Z,
The Soviet decision to attack the
Japanese government publicly both for its
handling of the MIG-25 incident and for
an unprecedented trip in early September
by the Japanese foreign minister to the
area of the Northern Territories is intend-
ed to put the onus on Japan for the
deterioration in Soviet-Japanese
relations. The Soviets probably hoped to
elicit some conciliatory gesture from
Japan, such as restricting US access to the
MIG-25 or hastening the plane's return to
the USSR.
Soviet tactics have not succeeded. Even
before Moscow went public with its
criticism of the Japanese, Tokyo had
suggested that a more conciliatory Soviet
tone-along with a satisfactory explana-
tion by Moscow of the MIG-25 in-
cident-was in order. Joint US-Japanese
exploitation of the plane is now under
way, and the director of Japan's Defense
Agency has justified Tokyo's thorough
examination of the aircraft by citing the
need to improve Japan's air defense
capabilities.
The MIG-25 incident has tended to
obscure recent exchanges between the
Soviets, the Chinese, and the Japanese on
the Northern Territories. In July, the
Japanese, in effect, asked the Chinese to
stop supporting Japanese claims to the
Northern Territories because Japan
regards the problem as a bilateral matter
between Moscow and Tokyo. The foreign
minister's trip may not have been made so
much to antagonize the Soviets as for
domestic political purposes and to
demonstrate to the Chinese that Japan
can handle its own problems.
Moscow clearly does not see it that
way. After Japan announced the trip, the
Soviets informed the Japanese that
henceforth the group of Japanese who
visit the Northern Territories annually to
pay their respects to the graves of their
ancestors must have passports and visas.
Until now, the Japanese have been ad-
mitted to the Northern Territories simply
with their Japanese identity cards. The
Japanese have refused to comply with the
Soviet demands and canceled this year's
visit.
Some Japanese are interpreting the
Soviet seizure two weeks ago of three
Japanese fishing vessels in the waters near
the Northern Territories as Soviet retalia-
tion for the foreign minister's trip. The
Soviets, however, seize about 50 Japanese
fishing boats a year for violating Soviet
territorial waters, and the most recent
seizures may have been coincidental.
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Maltese Prime Minister Mintoff's
Labor Party won a close but decisive vic-
tory over the opposition Nationalists in
the parliamentary election on September
17 and 18.
The official count is likely to give
Labor about 52 percent, which will
translate into a three-seat majority for
Mintoff in the new parliament. This is
more than enough to guarantee the con-
tinuation of a strong Labor government
for the next five years, given Mintoff's
tight control of his party and the unwaver-
ing loyalty of the Laborites in parliamen-
tary votes.
The result is a personal triumph for
Mintoff, and he will interpret it as a man-
date to continue his controversial foreign
policy aimed at avoiding alignment with
either the US or the USSR. Since taking
office in 1971, Mintoff has gradually
loosened Malta's traditional ties to the
UK and NATO and has sought to extract
bilateral pledges of economic assistance
and guarantees of Maltese neutrality from
nearby Arab and European countries.
In recent months, Mintoff has directed
his appeal mainly to Libya, Algeria,
France, and Italy. Paris and Rome have
temporized, but Libyan President
Qadhafi and Algerian President
Boumediene gave him public pledges of
support in late August.
With the election behind him, Mintoff
is likely to push harder for commitments
from the French and Italians. Some
Italian officials, including Rome's am-
bassador to Malta, are reportedly lob-
bying on behalf of Mintoff, but the An-
dreotti government is probably too preoc-
cupied with domestic problems to for-
mulate an official response any time soon.
There are signs that the French are in-
terested in finding a way to guarantee
Maltese neutrality, although Paris would
probably want to avoid a treaty to that
Supporters, with poster of Prime Minister Mintoff, celebrate victory
effect, as suggested by Mintoff. The
French have apparently concluded that
there is no real prospect of tying Malta
firmly to the West and that some form of
guaranteed neutrality might be the best
way to prevent the USSR from gaining
substantial influence in Malta.
The opening of the Italian Parliament
next week will mark the beginning of a
crucial round of political maneuvering in
which the legislature will be a more im-
portant political arena than in the past.
Prime Minister Andreotti's Christian
Democratic minority government was
able to take office last month only
because the Communists agreed to aban-
don their traditional opposition status and
join the Socialists, Social Democrats,
Republicans, and Liberals in abstaining
on his parliamentary confidence vote.
Because none of these parties is
represented in Andreotti's cabinet, the
final shape of the legislative program will
be influenced, more than in the past, by
parliamentary debate-in which the Com-
munists have the potential to play a domi-
nant role.
Many Christian Democrats fear that
their party could easily slide into a
legislative accord with the Communists
that could eventually set the stage for
Communist chief Berlinguer's "historic
compromise"-a governing partnership
between the two parties. Christian
Democratic leader Zaccagnini underlined
this problem in a major address this week,
in which he said that the new situation
required the closest possible liaison
between the party's leadership and its
parliamentary delegation.
Meanwhile, Republican leader La
Malfa-whose party joined the Christian
Democrats in most previous
coalitions-has provoked considerable
controversy by asserting that the "historic
compromise" has already occurred, for
all practical purposes, and that its for-
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malization is only a matter of time.
Recent meetings of various Christian
Democratic groups have demonstrated
that the vast majority of the party remains
opposed in principle to Berlinguer's
proposal. The Christian Democrats,
however, have yet to agree on a strategy
aimed at avoiding closer collaboration
with the Communists. They remain at
odds, moreover, on the broader question
facing their party: how to establish a
positive image based on something more
than anti-communism.
For their part, the Communists are ap-
parently having to deal with unease
among the rank and file over the party's
indirect support for a Christian
Democratic government. In a major
speech this week, Berlinguer went out of
his way to try to convince Communist
supporters that he is not selling out to the
Christian Democrats.
Berlinguer forcefully rejected the thesis
that his party is becoming social
democratic and asserted that it would
continue to pursue traditional communist
goals within the Italian context. He
assured his audience that the Communists
25X1 would insist on a significant policy voice
now and continue to work for full par-
ticipation in the government.
SWEDEN
v-4
2
The Social Democrats will be closely
watching the progress of the talks in the
hope of exploiting any signs of a crack in
the nonsocialist front. Despite Prime
Minister Palme's promise to "give them a
chance," he may try to woo the Liberals
into a government led by his Social
Democrats if the nonsocialists appear
stymied in coalition negotiations.
If the nonsocialist parties succeed in
forming a government, the Social
Democrats, with their strong support in
the Swedish labor federation, will be a
formidable opposition. This will become
apparent in the next six months when
labor-management bargaining must take
place on a national scale.
The Impact Elsewhere in Europe
Perhaps nowhere in Western Europe
were the Swedish election results followed
as closely as in West Germany.
Chancellor Schmidt's coalition Social
Democrats, who face a close election on
October 3, are probably worried that the
defeat in Sweden may be a harbinger of
trouble for their own party. Other Euro-
pean socialists believe there are signs of a
shift to the right that will help all conser-
vative parties.
In Finland, where the five-party coali-
tion of Prime Minister Miettunen resign-
ed last week, the Swedish result may
benefit the local Conservative Party in
municipal elections on October 17 and 18.
The Finnish Conservative Party is the
fourth largest in the country, but it has
been excluded from government since
1966 because of Soviet distrust of its
leaders and policies. The other non-
socialist parties could also receive a boost,
and if a new parliamentary election is
necessary there may be a significant
change in the composition of the next Fin-
nish government.
In Denmark, politicians will watch
local polls closely in the next few weeks.
Prime Minister Jorgensen's minority
Social Democratic government has been
tolerated by opposition parties for the
past year because polls had indicated that
there would be no significant changes in
The outcome of the election
September 19 gives Sweden's nonsociq
parties the opportunity to form their first
government in more than four decades.
The Center, Liberal, and Conservative
parties will have a total of 180 seats in the
new 349-seat parliament that convenes on
October 4. The incumbent Social
Democrats and their Communist allies
won 169 seats.
The Swedish electorate did not reject
social democracy but simply asked for a
respite from the demands of a highly cen-
tralized government and the constantly
growing burden of taxes needed to finance
a comprehensive social welfare program.
Public concern about the government's
plans to expand Sweden's nuclear energy
program may also have contributed to the
election outcome. Only the Center Party
has a consistent record of opposition to
the nuclear energy program and then only
in recent years. Center Party chairman
and probable new prime minister Thorb-
jorn Falldin had originally supported the
government energy program, but became
skeptical after studying potential en-
vironmental dangers. The Liberal Party
never strongly opposed the energy
program, and the Conservative Party sup-
ported it. Both of these parties were big
winners in the election.
Once the euphoria of victory has worn
off, the nonsocialists face the problem of
reconciling their long-standing differences
over domestic policies and beginning
negotiations for a coalition government.
The apportionment of cabinet posts and
the need to hammer out policy on a
number of issues may be difficult. Coali-
tion leaders may decide to resolve the
nuclear energy issue by calling a referen-
dum.
relative party strengths in an early elec-
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PANAMA
0
Finland's five-party coalition resigned
last week after it failed to reach agree-
ment on budgetary legislation. No succes-
sion is in sight, and Prime Minister Miet-
tunen has agreed to stay on as caretaker.
The cumbersome nine-month-old coali-
tion government, which included the
Communists, nearly fell twice last spring
over economic issues that still plague in-
flation-wracked Finland. Communist in-
sistence on a budget that would provide
for more jobs for Finland's unemployed
regardless of its inflationary impact
proved irreconcilable with the posi-
tions of most other parties. Although
the four other parties had a majority
without the Communists, Miettunen de-
cided to resign when the Social Democrats
and his own Center Party disagreed on
the level of agricultural subsidies.
There are a number of options open to
President Kekkonen as he attempts to end
the impasse; none promises a lasting solu-
tion. The most likely prospects appear to
be a reconstituted coalition of the same
five parties or of the three nonsocialist
parties and the Social Democrats. If these
fail, political leaders might try to put
together a minority government of the
centrist parties that would rely on support
from either the Social Democrats or the
Conservatives, depending on the issue.
If these schemes also prove un-
workable, Kekkonen may install a tem-
porary government of nonpartisan experts
to govern until a new election can be held.
Kekkonen may first want to review the
results of the municipal elections sched-
uled for October 17 and 18 to determine
whether another national election would
be likely to change the current line-up in
Parliament.
A decision for an early election might
be affected by the outcome of the West
German election on October 3. If the
West German Christian Democrats do as
well as Swedish conservatives did on
September 19, Kekkonen might be inclin-
ed to delay an election out of concern that
a swing to the Finnish Conservatives
might complicate relations with Moscow.
The government has apparently halted
the student-incited protests over the cost
of living that began on September 10.
Hundreds of arrests, a strong show of
force by the National Guard, and the tem-
porary closing of secondary schools and
the university seem to have quieted the
situation for the moment. Government
charges that the US was involved in the
disturbances appear to have had little im-
pact despite the wide media play they
received.
The protests-the most serious the
Torrijos government has faced since it
took power in 1968-attracted support
from worker groups and other
organizations and from the public in the
poorer sections of Panama City. There
were millions of dollars of property
damage but no deaths, largely because of
restraint by the National Guard. General
Torrijos was reluctant to crack down on
the students on whom he has counted for
support.
The regime attempted to make the US
a scapegoat for the disorders, alleging the
existence of a US "destabilization" cam-
paign under the direction of intelligence
agents. Following a familiar pattern, of-
ficial spokesmen later backed off from
these accusations, although still conten-
ding that a group of Canal Zone residents
hoped to wreck chances for a new treaty
between the US and Panama. The US
serviceman arrested in Panama and
charged with involvement in the distur-
bances will apparently be released shortly.
There is no short-term economic
upturn in sight, and plans to im-
pose austerity measures could cause
further political problems. A new and
more serious round of disorders may oc-
cur, and efforts to blame the US for
Panama's troubles are likely to be
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President Sadat sees Lebanon as the battleground for
leadership of the Arab world, and he thinks Egypt is losing
there to Syria. Sadat's rivalry with his Syrian counterpart is
affecting his perspective on a variety of issues.
sc 6,--2 c7
tinues to devote the' major portion of his
attention to developments in Lebanon,
where Egypt's rivalry with Syria is being
played out. Lebanon is the battleground,
in Sadat's eyes, for the leadership of the
Arab world-and Egypt is losing.
In the two years following the 1973
war, Sadat conducted Egypt's foreign
policy with confidence and an
ability-shared by few of his fellow Arab
leaders-to chart a long-range strategy.
Egypt's isolation from the rest of the
Arab world following the second Sinai
agreement in September 1975, however,
and its inability to counter Syria's rising
influence have left Sadat floundering.
Sadat prides himself on his ability to
act rather than merely react, but under
present circumstances he seems unable to
do more than react to Syrian actions.
Sadat decries the Arab penchant for emp-
ty sloganeering, but he now finds himself
in the company of radical Arabs who have
nothing more in common than the
negative goal of thwarting Syria. His
overriding concern is to regain the stature
he and Egypt have lost, and his policy is
now affected heavily by his rivalry with
Syrian President Asad.
Egypt and Syria in Lebanon
Egyptian-Syrian competition for
leadership in the Arab world is not new.
Nor is Sadat's present antagonism toward
Syria unprovoked. For the past year,
Syrian officials and Syrian media have
carried venomous propaganda attacks on
Egypt: Sadat's Rivalry with Syria
Egypt and Sadat personally, asserting
that signing the Sinai agreement with
Israel amounted to "treason" to the Arab
cause.
The Egyptians' response has gone well
beyond a mere defense of their position,
however. Egyptian statements have open-
ly advocated Asad's overthrow, declaring
in tones that approach hysteria that the
Syrian army is certain to "tread upon"
the Asad regime for its "shameful" ac-
tions in Lebanon.
Sadat is actively attem in to thwart
Syria's course in Lebanon.
Egypt's political outlook is fundamen-
tally opposed to that of the leftists it now
is arming, and Egyptian policies would
not be served by the rise of a radical
government in Lebanon. Early in the civil
war, in fact, Egypt sympathized with the
Christians because it was concerned that a
Muslim government would prove to be
too radical. Sadat may calculate that the
leftists will be unable to seize power even
with his aid, but he no longer appears in-
fluenced by such longer term con-
siderations; he supports the leftists simply
because Syria does not.
The Egyptians have been attempting in
the past two weeks to put themselves
forward as mediators in the Lebanon
problem, but this seems primarily a bid to
pre-empt, or at least to share the credit
for, Syria's mediation efforts. The Egyp-
tians have thus far carefully selected their
contacts, ignoring some of the Christian
leaders-notably Camille Shamun-
whose acquiescence in any truce
plan would be essential.
Sadat is apparently also, despite his
reported agreement to meet with Asad
and other Arab leaders to discuss
Lebanon, still refusing to consider a
reconciliation with Syria. This is
something many Lebanese leaders have
recently said is essential to a resolution of
the Lebanon crisis.
The Palestinian Factor
Syria's confrontation with the
Palestinians has given Sadat a new oppor-
tunity to portray himself as the champion
of the Palestinian movement, a role
played with success by Asad last fall.
This too has been motivated largely by a
desire to counter Syria's progress in
Lebanon.
The Egyptians have almost certainly
been secretly pleased to see Palestinian
wings clipped. They were themselves at
odds with the Palestine Liberation
Organization over the Sinai agreement
before the Syrian-Palestinian conflict
arose. Egypt has always believed that
peace negotiations with Israel could
proceed only if the PLO were under the
strong influence of the Arab states,
primarily Egypt.
Sadat seems to believe that if Syria
tries to replace the PLO leadership with a
leadership controlled from Damascus, the
rank and file of the so-called moderate
Palestinian organizations will break away
and turn leftward, upsetting prospects for
progress in Arab-Israeli negotiations.
Sadat's attitude toward the Palestinians
is inconsistent in several respects. He ap-
parently sees no contradiction between his
professed fear that Syrian control of the
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PLO would cause a turn toward
radicalism and his confidence that control
exercised by Egypt would not have the
same results.
Sadat also seems unprepared for the
possibility that Syria and the PLO will
reach an accommodation in which the
PLO is responsive to Syrian influence but
under something less than full Syrian con-
trol. In his present state of mind, Sadat
would be unlikely to maintain amicable
ties with a PLO closely associated with
Syria. He is playing an all-or-nothing
game that could leave him with nothing.
Irritating His Friends
Sadat has allowed his competition with
Asad to dictate his policies in areas other
than Lebanon. The rivalry has had a
damaging effect on his relationship with
his most important ally, Saudi Arabia.
The Saudis have made it clear that they
sympathize with Syria's objectives in
Lebanon, that they support the means
Syria is using, and that they regard
Egypt's actions there and its anti-Syrian
propaganda as short-sighted, even
dangerous. Sadat listens to their counsel
but does not heed it.
Sadat is aware that there is little danger
the Saudis will completely withdraw their
support. They still place much stock in
their partnership with Sadat. They have
made an art, moreover, of avoiding firm
stands on either side of any inter-Arab
quarrel and, while they now sympathize
more with Syria, they are unlikely ever to
throw the full weight of their support
behind the Syrians. Sadat has been able
effectively to exploit this Saudi am-
bivalence.
The Saudis do, however, wield con-
siderable influence by virtue of their
financial assets and-for reasons related
both to Egypt's poor financial manage-
ment and to its disruptive tactics toward
Syria-they have recently shown a greater
reluctance to continue doling out money
to the Egyptians without a political
return. Egyptian-Saudi ties show signs of
fraying, and Sadat risks a further
deterioration in a relationship of critical
importance to Egypt if he pursues his an-
ti-Syrian policies.
DIA does not believe that Sadat
continues to devote the "major por-
tion" of his attention to developments
in Lebanon, and we do not believe that
Lebanon is the win-or-lose-all arena
within which Egypt's rivalry with Syria
is being decisively played out.
DIA's views are these:
With respect to leadership of the
Arab world, Lebanon for, Egypt
represents a-nolo contendere situation.
Lebanon traditionally has fallen within
the Syrian sphere of interest and Syria
clearly holds the trump cards insofar
as current Lebanese affairs are con-
cerned. Egypt does not have con-
tiguous borders with Lebanon, nor
does Egypt have the military
resources, given present cir-
cumstances, to decisively influence
events in Lebanon. Egypt has never ex-
ercised hegemony over Lebanon; thus
there is no reason why Lebanon should
be perceived by Sadat as the
"battleground" for leadership of the
Arab world.
Sadat does perceive that Asad'sin-
fluence has been enhanced by the
Personal Antagonism
Governing, and particularly the con-
duct of foreign policy, are highly per-
sonalized matters for Sadat. He is jealous
and protective of Egypt's position of
leadership in the Arab world and of his
own personal standing as the premier
Arab leader. When his leadership is
challenged-as it now is being challenged
by Syria-he reacts as if to a personal af-
front.
He is allowing his attitude toward Syria
to affect his perspective on relations with
Syria's friends. He criticizes the Saudis,
for example, in sarcastic speeches about
their financial "generosity."
He sees Soviet conspiracies with Syria
where none exist. Finally, he is increasing-
ly jealous of the US relationship with
latter's actions in Lebanon, and Sadat
is certainly concerned about what final
effect any resolution of the Lebanese
crisis will have on Asad's influence. At
the same time, Sadat recognizes that
there are many pitfalls into which
Asad may potentially plunge.
Sadat is a shrewd and very
pragmatic politician; recognizing early
on that his ability to influence the
Lebanese situation was limited, he
decided that it was not in Egypt's
national interest to become deeply in-
volved because there was nothing
significant to be gained, as compared
with what could be lost. Since there is
.much territory yet to cover and there
are many options open to both leaders,
DIA believes that Sadat elected a
"wait and see" strategy.
DIA believes that Sadat's
"overriding concern" is that of solving
Egypt's domestic ills, not the least of
which is territory occupied by the 25X1
Israelis. The stature of Egypt in the
Arab world, while important, is clearly
Syria, convinced that the !US is urging
Syria on in Lebanon, and reluctant to talk
frankly with US officials in Cairo about
Egyptian attitudes toward the Lebanon
problem.
Sadat once talked of his goals for Egypt
and the Arab world; he talks now in his
speeches of little else but his hatreds-of
Syria, of Libya, of the Soviets, of his
domestic opponents.
He once avoided direct discussion of his
leadership of the Arab world, confident
that he was exercising it b example; he
now speaks continual)
25X6
about Egypt's 25X1:5Xb
worthiness to lead the Arabs. Sadat
knows that Egypt is not leading, and there
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Lebanon's new president faces imposing obstacles; to a
large extent, resolution of the civil war depends on factors
beyond his control. Even so, his pragmatism and his commit-
ment to reconciliation open some new chances for an end to the
conflict.
ress ent Ilyas
The inauguration of President'
Sarkis on September 23 by no means
promises an end to Lebanon's civil war. It
will create some new frictions as alliances
shift to accommodate the new Christian
leader, and it could prompt extremists to
initiate new violence. Over the long term,
however, the replacement of the intran-
sigent Sulayman Franjiyah with a leader
committed to reconciliation opens up new
chances for ending the conflict.
In the eyes of many Lebanese, Fran-
jiyah bears personal responsibility for
what has happened in Lebanon. He
became a symbol of Christian "tyranny"
to the country's Muslim majority. He
often provided left-wing leaders with
justification for their militancy and dis-
couraged conservative Muslims from
seeking a settlement as long as implemen-
tation would be under Franjiyah's
auspices.
Christian extremism flourished under
Franjiyah's leadership. He never had a
broad following, and his often parochial
viewpoint was easily manipulated by
former president Camille Shamun and
Shamun's militant Christian allies. The
end of Franjiyah's presidency allows those
Christians seeking a compromise to speak
out more forcefully against extremism.
Franjiyah's departure may also provide
combatants on both sides a face-saving
pretext for softening positions they know
to be untenable. Leftist leader Kamal
Jumblatt has made Franjiyah's removal a
personal cause and may now welcome the
chance to temper his militancy as his con-
servative Druze constituency has been
Lebanon: Presidential Turnover
urging. Jumblatt is probably also worried
about his growing isolation from key
leftist and Palestinian allies, some of
whom have been saying that they must
make concessions.
With Franjiyah gone, the relatively
conciliatory leaders of the Christian
Phalanges Party will be better able to per-
suade their followers that compromise is
necessary.
Franjiyah's determination to serve out his 25X1
term and came to believe the argument
that any compromise by the Christians 25X1
will erode their political dominance. The
transfer of power to another Maronite
Christian president should help refute this
argument.
Sarkis' Dilemmas
The psychological impact of Fran-
jiyah's departure will be an important
asset to Sarkis and, coupled with his own
determination to forge a settlement, will
help create an atmosphere for serious
peace talks. This effect may be only tran-
sitory, however, and Sarkis will be work-
ing not only against time but against a 25X1
number of serious liabilities.
As long as this dispute festers, Sarkis
cannot even begin to cope with differences
among the Lebanese, and he stands to lose
stature as the conflict drags on. Although
the Syrians have recently shown a
willingness to give negotiations with
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Palestinian leaders one last try, they seem
no less determined to dictate terms and
are preparing to take new military action
if the talks break down.
The Syrians recognize that new fighting
could hurt Sarkis, and they would like to
avoid that if possible. They see Sarkis
primarily as an instrument for fulfilling
their own policy goals, however, and not
necessarily the only one.
Syria's determination to bring the
Palestinians to heel has already placed
Sarkis in an awkward position. Sarkis is
acutely aware that he must retain the
respect and confidence of the Palestinians
if he is to have any chance of negotiating a
durable peace. On the other hand, he is
beholden to the Syrians for his election
four months ago, and he can rely on no
other source of power to give credible
backing to his leadership.
Sarkis has so far been able to dissociate
himself from the military moves Syria has
made and to skirt the broader and more
controversial questions concerning his
future authority over Syrian troops in
Lebanon and the conditions under which
they will be asked to withdraw. Now, he
will be held responsible for Syria's actions
in Lebanon and will come under intense
pressure to establish ground rules for the
presence of Syrian troops and a timetable
for their withdrawal. However deftly
Sarkis handles these issues, he is bound to
alienate some key players in the dispute.
The new President also faces difficulties
in dealing with Lebanese Christians. He
has no popular base within the Christian
community nor is he part of the estab-
lished Christian leadership. He has
started to regroup associates of his po-
litical mentor, the late president Fuad
Shihab, but it will take some time for
him to establish any significant author-
ity over the existing Christian power
blocs. Sarkis must remain in the good
graces of present Christian leaders if
he is to have any constituency at all.
At the same time, he must persuade the
Christians to acknowledge their minority
status and to accept a diminution of their
political prerogatives and a more flexible
approach to the reunification and
reconstruction of the country. In this ef-
fort, his most formidable opponent will be
Camille Shamun.
Shamun has a long-standing grudge
against Sarkis stemming from Shamun's
intense rivalry with the Shihab regime.
Shamun has never publicly endorsed
Sarkis and accepted his assumption of the
presidency only as an expedient for
protecting the Christians' current alliance
with the Syrians. Shamun also believes
Sarkis' efforts to negotiate with the
Palestinians and the Lebanese left are
futile and perhaps not in the Christians'
best interest.
Sarkis may not be without allies in
dealing with Shamun. Phalanges Party
chief Jumayyil criticized with unusual
sharpness Shamun's blatant manipulation
of cabinet posts during the final weeks of
the Franii h
Shamun, moreover, may be on a colli-
sion course with the Syrians who intend to
play a central role themselves in
rebuilding the Lebanese government and
military. Their current cooperation with
Shamun is for the purpose of cutting the
Palestinians down to size and of ultimate-
ly balancing off the strengths of all the
major combatants. They presumably
would have no compunction about
limiting Shamun's power if it begins to in-
terfere with their own objectives.
Prospects
The immediate obstacles in Sarkis'
path and the sheer magnitude of the task
before him make his prospects for success
bleak. Resolution of the conflict to a large
extent depends on factors beyond his con-
trol; Lebanon has become the victim of
broader problems in the Middle East.
We know little about the approach
Sarkis intends to take with regard to
specific issues, but he has already set a
positive tone. As a Christian., he is no
doubt committed first to protecting Chris-
tian interests, but he has nevertheless
found common ground even with Kamal
Jumblatt on issues of social and economic
change. He recognizes his dependence on
25X1
25X1
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the Syrians, but he has been able to con- practicality. His pragmatism will offend
vince many Lebanese leaders that he is his fellow Christians as well as the
committed to protecting Lebanon's in- Muslim left-both of whom see their
dependence. struggle in moral as well as political
Finally, he is a man who emphasizes terms-but it may put Sarkis above the
Non-communist countries are importing more oil at higher
prices this year than last, and we expect their oil bills to be near-
ly 20 percent higher for the year as a whole. Prospects are for
continuing increases next year in both price and volume.
endless wrangling over which side is right
and which is wrong. It will also help him25X1
to set attainable goals and realistic
priorities where there have been none.
Oil Sales Rising in Volume and Price
Higher volumes and prices pushed the
oil bills of non-communist nations to a
record $60.6 billion in the first half of
1976. We expect the total cost for 1976 to
reach $127 billion, 19 percent above the
1975 level.
Higher oil import volume accounted for
more than half the increase in oil bills.
Imports were 27-million barrels per day,
compared with 25-million barrels per day
in the first half of 1975.
Because of the price hike imposed in
September 1975 by the Organization of
Petroleum Exporting Countries, the
average price of imported oil in the first
half of 1976 was 9.5 percent above the
level a year earlier.
Import volumes in the seven major in-
dustrial countries-the US, UK, France,
Italy, West Germany, Japan, and
Canada-in the first half of this year were
roughly 8 percent above levels a year
earlier. US oil import volume jumped
nearly 13 percent.
Net oil imports of non-OPEC develop-
ing countries as a group grew to an es-
timated 3-million barrels per day in the
first half of 1976, up 10 percent from the
first half of 1975. Import growth in the
stronger economies such as South Korea
and Taiwan has been particularly rapid,
running close to 20 percent annually. In-
creasing oil production, primarily in Mex-
ico and Egypt, has kept the overall
developing countries' deficit from
skyrocketing.
Despite the recent slackening in the
pace of economic recovery in several ma-
jor countries, the volume of oil imports by
the seven major industrial countries in the
second half of this year will be 1 I percent
above the volume for the first half of 1976
and 17 percent above the average 1975
rate. Stockpiling in anticipation of the ex-
pected December OPEC price hike will
account for some of the increase. We ex-
pect imports by the small developed coun-
tries to rise by about 2 percent in the se-
cond half of 1976.
Prospects Next Year
In 1977, oil bills will be determined
mainly by the price decision taken by
OPEC oil ministers at their December
meeting. At the 1976 volume, each 1-per-
cent change in price will have a $1.3-
billion effect on non-communist coun-
tries' oil bills. If economic activity con-
tinues to rise as expected in 1977, the oil
import bill could reach $152 billion.
The increase in oil bills next year will
not be evenly distributed.
Even without a price hike, the US bill
would increase by roughly $6 billion in
1977 because of rising consumption and
declining production. A 15-percent OPEC
price rise would add $5 billion, bringing
the oil import bill to $44 billion next year,
compared with $32 billion in 1976.
We expect the volume of Japanese oil
imports to increase 5 percent in 1977. A
15-percent rise would boost Japan's oil
bill to roughly $28 billion next year, com-
pared with $23 billion in 1976.
Britain's oil bill will fall substantially
because of rapidly rising North Sea
production. France and Italy, which lack
alternative energy sources, will import
substantially more oil next year. Import
bills are likely to rise by about $2.1 billion
and $1.7 billion respectively. The West
German bill will rise by $2 billion.
Canada's net oil import bill will more
than triple in 1977 because the expected
5-percent rise in oil demand will have to
be covered entirely by imports.
The expected $25-billion increase in oil
bills next year should not, of itself, prove
an unmanageable burden for the con-
suming countries. It will, however, ex-
acerbate existing economic problems for
many.
The higher oil bills will intensify current
account problems in some countries. Italy
and France, after achieving near balances
in their current accounts last year, have
already seen their balances shift into the
red.
The expected oil price hike will also hit
hard at the current accounts of some
countries such as Greece and Portugal,
which have experienced deficit problems
over the last few years.
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Emigre terrorists, particularly Croatians, have been a
thorn in the side of the Yugoslav regime since its inception.
They have been unable to mount a serious challenge to Presi-
dent Tito but may try to test the new regime after his death.
S.
The recent hijacking of a TWA aircraft
by Croatian emigre terrorists underlines a
problem for Yugoslavia as it prepares for
the period after President Tito's death.
Emigre attempts to create serious in-
stability in Yugoslavia are likely to inten-
sify after Tito dies or becomes in-
capacitated.
The emigres, badly divided even within
their own nationalist sub-groups, have
never been able to mount a direct, con-
certed challenge to Tito, but their opposi-
tion constantly nibbles at the leadership's
confidence that Tito has created a unified,
multinational state that will hold together
when he is gone.
The regime has tried to intimidate the
emigres. In the past two years there have
been at least 11 unsolved murders of
emigres abroad. Many, if not all, were
probably ordered by the Yugoslav secret
police. Yugoslav officials tend to react in-
temperately to emigre acts of violence,
often in ways that undermine
Yugoslavia's case as the victim of
terrorism.
Croat Emigres
The Tito regime's most serious emigre
problems are with the Croatians.
Organized Croat opposition from outside
Yugoslavia was led initially by the fascist
Ustashe, the group that ran the pro-Nazi
Independent State of Croatia during the
war. Most of the key Ustashe leaders have
died or gravitated into smaller, even more
extreme emigre organizations. With their
passing, younger emigres of the postwar
generation-many of whom grew up in
Yugoslavia-have replaced them.
Yugoslavia: The Emigre Problem
The Croat emigre opposition is now
made up of several major groups, which
have defied attempts to unite them. The
current umbrella organization, the Croat
National Council, resulted from an effort
two years ago to impose common goals
and strategies, but it has had rough going
because of jealousies and the rigid
autonomist ideals of the four major
founding groups.
At present, the Council is reportedly
torn by sharp disagreements between
"moderates" and "radicals" over the
desire of the moderates to break totally
with the movement's early fascist-Ustashe
origins, and thus to attract Western sym-
pathies.
The Croat National Committee, based
in West Germany, is a much older
organization that has also tried to adopt a
more respectable image. It is affiliated
with the Croat National Council, but, un-
like the umbrella organization, its
leadership endorses violence. On occa-
sion, the National Committee has even in-
dicated that it would accept Soviet aid-if
offered-in overthrowing Tito.
Several other Croat groups are openly
terrorist. They provide most of the man-
power for terrorist attacks on the Tito
regime.
? The Croat National Resistance
and its unruly offshoot, the Drina
Group, have conducted attacks on
Yugoslav officials abroad and have
carried out bombings and other
sabotage in Yugoslavia. Yugoslav
Ambassador Rolovic was assassinated
in Sweden by the group five years ago.
? The Croat Liberation Movement
(known by its Croatian acronym,
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HOP) is largely made up of younger
militants with a smattering of old
Ustashe hands. HOP leaders are
dedicated and ruthless.
? The extremely radical Croat
Revolutionary Brotherhood is regard-
ed by moderates in the National Com-
mittee as totally unpredictable. The
Brotherhood took credit for an abor-
tive guerrilla raid into Yugoslavia in
the summer of 1972.
? The Croat Liberation Army has
in recent years conducted several
daring-but unsuccessful-assassina-
tion operations against prominent men
in Tito's regime.
Several other anti-Tito Croat groups ex-
ist, but they are generally weak and in-
effective. A number of emigrants have
made halting efforts to organize a
nominally communist opposition abroad
that might attract disaffected Croat
leaders within Yugoslavia.
Serbs
While the Croats are the regime's
primary concern, Belgrade is also sen-
sitive about Serb emigres--part icularly
those who might exploit lingering sym-
pathies for Draza Mihailovic's Chetniks
of World War 11. Except for occasional
actions by a group called Fatherland,
Organ of Serb Fighters for Freedom, the
Serb emigres do not often resort to
terrorism.
To some extent, Tito's nervousness
about Serb emigres stems from his failure
to develop a strong and reliable power
base in Serbia. The Serbian party has
been ravaged by several major purges in
the last decade, and no single leader can
realistically claim to speak for Serbian in-
terests. In this vacuum, the emigres have
been able to pose ready, attractive
answers without employing the desperate
measures of their Croat counterparts. At
least three Serb leaders in exile have been
murdered in the past two years.
Terrorism
Until a few years ago, Croatian
terrorist groups worked from apparent
safe havens mainly in West Germany,
Spain, Portugal, and Australia. Growing
international revulsion against terrorism
has complicated their efforts, and many
terrorists have been expelled or their
organizations made unwelcome in a
number of Western countries.
Most of the funds for the terrorist
groups are evidently donated by Croat
organizations in the US and Western
Europe that on their own do not under-
take overt actions against Tito's govern-
ment. Recurring rumors have circulated
that Croat terrorists have been trying to
establish links with the Irish Republican
Army and to attract financial aid from
Western governments or-failing
that-Libya. There is no evidence that
they have succeeded.
We do not know how much support the
emigres have inside Yugoslavia. The
evidence of collaboration by resident
Croatians with the emigres is spotty.
There is residual distaste among many
Croatians for Ustashe atrocities against
Serbs during the war. The assassinations
of non-Croat diplomats abroad
presumably have kept alive fears that the
emigres are fanatics.
Belgrade has tried to counter the
emigre threat by:
? Pressing foreign governments to
deny them bases of operation.
? Undermining the new "respon-
sible" groups that pose a more difficult
problem because they usually abide by
the letter of the law.
? Eliminating as many troublesome
emigre leaders as possible and in ways
that could set the emigre groups
against one another.
? Identifying and isolating any
potential sources of support for the
emigres either in Yugoslavia or among
the 850,000 Yugoslavs temporarily
employed abroad.
These measures may help to ensure that
no coordinated, strong challenge to the
Titoist system emerges, but they cannot
stop terrorism or greatly influence the
groups that finance and otherwise support
the terrorists.
When Tito dies, available evidence
suggests that the regime will tighten inter-
nal security controls in expectation of a
wave of desperate acts by emigre
terrorists. We expect that the borders will
be watched closely, special counterterror
operations will begin immediately, and
suspected troublemakers will be arbitrari-
ly detained.
These steps will provide no guarantees
against terrorist attacks on Yugoslav in-
stallations and personnel abroad, 25X1
however, and they will not prevent
daring-if suicidal-actions within
Yugoslavia itself.
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